By Justin Carrigan July 24 (Bloomberg) -- The euro rose against the dollar and the yen, while stocks extended the longest winning streak in more than five years, on evidence that the worst recession since World War II is moderating. The euro snapped a three-day decline against the dollar, rising as much as 0.6 percent as of 9:23 a.m. in London, and advanced for a second day versus the yen. The MSCI World Index gained 0.3 percent to 1,028.15, climbing for a 10th straight day in its longest sequence of gains since December 2003. Business confidence in Germany, Europe’s largest economy, rose for a fourth month in July, the Ifo institute in Munich said today. Data from Markit Economics showed Europe’s manufacturing and service industries contracted more slowly in July, beating analysts’ estimates. Federal Reserve Bank of Dallas President Richard Fisher said yesterday he sees “the beginnings of a faint recovery.” “Incoming data surprises are finally coming in on the upside,” said Michael Rottmann, head of fixed-income research in Munich at UniCredit Markets & Investment Banking. “We’ll see a further break higher in the euro-dollar exchange rate.” The yen fell against all of its 16 most-traded peers as investors sought higher-yielding currencies. The Australian dollar added 0.7 percent versus the yen and 0.6 percent compared with the dollar. Brighter Outlook Government bonds fell, led by German bunds, on waning demand for the safest assets. The yield on the 10-year German bund added 4 basis points to 3.49 percent, while 10-year Treasury yields rose 2 basis points to 3.68 percent. “For the first time in a long time, the outlook for the global economy brightened,” European Central Bank governing council member Ewald Nowotny said today. The pound weakened 0.2 percent against the dollar and the euro, reversing earlier gains, after the London-based Office for National Statistics said U.K. gross domestic product shrank 0.8 percent from the first quarter, more than twice as much as economists had forecast. Europe’s Dow Jones Stoxx 600 Index climbed for a 10th day, adding 0.6 percent in the longest rising streak since 2006. Vodafone Group Plc, the world’s largest mobile phone company, gained 3.6 percent after reporting higher first-quarter sales. TeliaSonera AB jumped 6.6 percent after Sweden’s biggest telephone company said second-quarter profit increased. Futures Gain Futures on the Standard & Poor’s 500 Index added 0.2 percent. Amazon.com Inc., Microsoft Corp. and American Express Co. fell in European trading after reporting earnings that disappointed investors. Earlier in the week Caterpillar Inc. and EBay Corp. profits beat analyst estimates. Per-share profits have beaten projections at about 74 percent of companies in the S&P 500 so far, while 49 percent exceeded estimates on sales. “It is cost cutting that is driving performance rather than real growth, which is fine for corporate bonds but not so good for equities,” said Gary Jenkins, a strategist at Evolution Securities in London. “We really are in ‘is the glass half empty or half full?’ mode.” The cost of protecting investment-grade corporate bonds from default dropped to the lowest in more than 11 months, with the Markit iTraxx Europe credit swaps index falling 2.5 basis points to 93.5, JPMorgan Chase & Co. prices show. Copper Gains Copper for delivery in three months rose 0.3 percent to $5,548 a metric ton on the London Metal Exchange, rebounding from an earlier decline of as much as 1.4 percent. Aluminum, nickel and zinc also advanced. Crude oil added 0.6 percent to $67.57 a barrel on the New York Mercantile Exchange. China’s central bank said it will guide “appropriate” growth in credit after record new lending in the first half of the year. China is the world’s largest consumer of commodities such as copper, aluminum and iron ore. The ruble strengthened for the fourth day this week against the dollar as oil, Russia’s main export earner, advanced. The currency gained 0.3 percent to 31.0779 per dollar, extending this week’s rally to 2.1 percent. Evidence is mounting that the world’s biggest economies are emerging from their deepest recessions since World War II after the U.S. government and the Federal Reserve pledged $12.8 trillion to revive growth following the seizure in credit markets in August 2007. The Organization for Economic Cooperation and Development said June 24 gross domestic product in the 30 industrialized member countries will grow 0.7 percent next year after shrinking 4.1 percent in 2009. To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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